Sprint to Dump WiMax Plans?
Posted on November 10, 2007 By: Mike, VoIP Facts: The Blog email author
Filed Under WiMax
Yesterday, Sprint/Nextel and Clearwire Communications jointly announced the dissolution of a strategic partnership formed in July to launch a nationwide rollout of WiMax that was to begin in earnest in 2008, according to an AP report. Can’t say we didn’t see that coming.
The departure of Sprint CEO Gary Forsee in October was a clear indication that shareholders were getting antsy over his 3 billion dollar WiMax aspirations. A disappointing 3rd quarter earnings report released November 1st; followed by yesterdays break with Clearwire, seem to point to the boards intentions of abandoning the project of the largest holder of WiMax spectrum in the country.
According to spokespeople from both Sprint and Clearwire, the deal was nixed because of the complexities involved. Sprint says it will collaborate on building out a WiMax network with Clearwire in the future. Maybe just on a smaller scale? Sprint maintains that it is going ahead with its soft launch later this year in Chicago, and is on track for the wider commercial rollout in 2008. Beyond that, they are reviewing their business plan and will get back with us next year.
For Clearwire, whose stock tumbled a good 25% on the news, this is clearly a blow. The plan in July was for Clearwire to handle the smaller markets, with Sprint tackling major metropolitan areas starting with Chicago, Baltimore, and Houston. Spectrum was traded, leaving Clearwire with a bunch of Tier 2 frequency more suited for smaller rural areas, with Sprint ending up with the lion’s share of the major markets.
So what does this mean for the future of WiMax in the U.S.? Clearly, any nationwide rollout of a WiMax network is put on hold indefinitely. But with Sprint/Nextel seemingly out of the picture, this could open up the market to a host of new players.
According to CNNMoney.com, Clearwire already has partnerships with EchoStar and DirectTV satellite companies to bundle video over their pipe. The cable companies could also benefit by adding wireless to their triple play offerings.
Google has announced its intention to bid in the upcoming FCC auction, but no one really believes they want to build out a network. Partnering with a company such as Clearwire would give them a platform for their Android mobile OS, and a nationwide open WiMax network fits well into their net neutrality philosophy.
With a subscriber base of 348,000 and the experience that comes with building out wireless networks spreading over 16 states, Clearwire is well poised to develop strategic partnerships with any number of would be players. But even as the second largest holder of the 2.5GHz frequency in the U.S., for Clearwire to remain a player themselves, they need more spectrum.
Which brings us back to Sprint. What are they going to do with all that spectrum they own? They could spin it off in an IPO, which in turn could reignite collaboration with Clearwire. This would be a good scenario, as the spectrum owned by the two entities would compliment each other. Alternatively, they could just sell it off and spread it around if they truly want to get out of the WiMax business. That certainly would beef up their bottom line, satisfying shareholders and potentially making them a buy out target, according to some.
WiMax as an emerging technology is already being deployed throughout the world and has the potential of bringing full scale broadband access to millions of people out of the reach of a wire line infrastructure. With the U.S. lagging its peers in broadband penetration, the FCC has just recently proclaimed that we are in “dire need of a national broadband strategy”. The upcoming FCC auction is opening up part of the 700Mhz band as TV converts to digital, frequencies particularly well suited for WiMax and capable of penetrating deep into structures.
Consumers, it is said, would welcome an alternative to the DSL/Cable monopolies, and the idea of piggybacking your cell phone over your broadband access is something the 3G cellular networks can or will not do.
Yes, WiMax is a disruptive technology, and like Voice over IP before it, giants could fall as early adopters gain market share. As the competition heats up, innovations as yet not dreamed of will proliferate in an environment of open standards and penetrate the marketplace, benefitting consumers with lower prices and more choice.
With Sprints intentions being in limbo, it just seems like it will be later rather than sooner.
Hey Sprint, you in or out?
wireless, sprint, clearwire, WiMax, broadband
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